Span America Medical Systems (SPAN) 10-Q 16 Aug 16 2016 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Jul. 02, 2016	Aug. 15, 2016
Document Information [Line Items]
Entity Registrant Name	SPAN AMERICA MEDICAL SYSTEMS INC
Entity Central Index Key	718,924
Trading Symbol	span
Current Fiscal Year End Date	--10-01
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		2,755,625
Document Type	10-Q
Document Period End Date	Jul. 2, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Amendment Flag	false

Consolidated Balance Sheets (Cu

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jul. 02, 2016	Oct. 03, 2015
Current assets:
Cash and cash equivalents	$ 3,231,435	$ 1,224,026	[1]
Accounts receivable, net of allowances of $143,000 (July 2, 2016) and $148,000 (Oct. 3, 2015)	5,926,248	7,813,773	[1]
Inventories - Note 3	8,108,632	8,746,039	[1]
Deferred income taxes	351,000	351,452	[1]
Prepaid expenses	975,408	411,528	[1]
Total current assets	18,592,723	18,546,818	[1]
Property, plant and equipment, net - Note 4	4,272,230	4,536,104
Goodwill	3,968,841	3,930,282	[1]
Intangibles, net - Note 5	2,064,138	2,214,762	[1]
Other assets - Note 6	2,745,968	2,953,656	[1]
	31,643,900	32,181,622	[1]
Current liabilities:
Accounts payable	2,318,840	4,035,333	[1]
Accrued and sundry liabilities	2,680,649	3,120,111	[1]
Total current liabilities	4,999,489	7,155,444	[1]
Deferred income taxes	349,969	348,479	[1]
Deferred compensation	311,282	375,939	[1]
Total long-term liabilities	661,251	724,418	[1]
Total liabilities	5,660,740	7,879,862	[1]
Common stock, no par value, 20,000,000 shares authorized; issued and outstanding shares 2,734,468 (July 2, 2016) and 2,737,468 (Oct. 3, 2015)	169,380		[1]
Additional paid-in capital			[1]
Retained earnings	28,163,034	26,848,299	[1]
Accumulated other comprehensive loss	(2,349,254)	(2,546,539)	[1]
Total shareholders' equity	25,983,160	24,301,760	[1]
	$ 31,643,900	$ 32,181,622	[1]
[1]	The Balance Sheet at October 3, 2015, has been derived from the audited financial statements at that date.

Consolidated Balance Sheets (C3

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Jul. 02, 2016	Oct. 03, 2015	[1]
Allowance for doubtful accounts	$ 143,000	$ 148,000
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	2,734,468	2,737,468
Common stock, outstanding (in shares)	2,734,468	2,737,468
[1]	The Balance Sheet at October 3, 2015, has been derived from the audited financial statements at that date.

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)		3 Months Ended		9 Months Ended
		Jul. 02, 2016	Jun. 27, 2015	Jul. 02, 2016	Jun. 27, 2015
Net sales		$ 15,347,377	$ 15,813,474	$ 51,652,188	$ 46,567,766
Cost of goods sold		9,693,582	10,372,903	35,324,256	30,696,346
Gross profit		5,653,795	5,440,571	16,327,932	15,871,420
Selling and marketing expenses		2,697,970	2,717,470	7,844,102	8,090,610
Research and development expenses		276,553	281,798	845,717	877,726
General and administrative expenses		1,193,092	1,123,101	3,435,288	3,316,021
		4,167,615	4,122,369	12,125,107	12,284,357
Operating income		1,486,180	1,318,202	4,202,825	3,587,063
Non-operating income (expense):
Foreign currency (loss) gain		(67,025)	65,154	410	263,103
Interest expense				(5,144)	(6,285)
Other		64	(821)	(7,371)	45,417
Net non-operating income (expense)		(66,961)	64,333	(12,105)	302,235
Income before income taxes		1,419,219	1,382,535	4,190,720	3,889,298
Provision for income taxes		484,000	420,000	1,355,000	1,183,000
Net income		935,219	962,535	2,835,720	2,706,298
Other comprehensive income (loss), after tax:
Foreign currency translation gain (loss)		73,724	207,013	197,285	(920,598)
Comprehensive income		$ 1,008,943	$ 1,169,548	$ 3,033,005	$ 1,785,700
Net income per share of common stock:
Basic (in dollars per share)		$ 0.34	$ 0.32	$ 1.04	$ 0.91
Diluted (in dollars per share)		0.34	0.32	1.03	0.90
Dividends per common share (1) (in dollars per share)	[1]	$ 0.16	$ 0.15	$ 0.48	$ 1.45
Weighted average shares outstanding:
Basic (in shares)		2,734,468	2,991,192	2,729,743	2,976,994
Diluted (in shares)		2,758,503	3,017,536	2,755,161	3,006,430
[1]	Dividends per common share for the nine months ended June 27, 2015 include a special dividend of $1.00 per share paid on January 7, 2015.

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jul. 02, 2016		Jun. 27, 2015
Operating activities:
Net income	$ 2,835,720		$ 2,706,298
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	902,022		917,544
Provision for losses on accounts receivable	(7,051)		41,956
Loss (Gain) on sale and disposal of equipment and patents	7,686		(45,850)
Loss on disposal of other assets	3,863
Increase in cash value of life insurance	(106,036)		(110,567)
Deferred compensation	(64,657)		(61,138)
Stock compensation expense			19,978
Changes in operating assets and liabilities:
Accounts receivable	1,913,099		(1,860,815)
Inventories	690,735		546,957
Prepaid expenses and other assets	11,811		326,793
Accounts payable and accrued and sundry liabilities	(2,226,846)		1,525,254
Net cash provided by operating activities	3,960,346		4,006,410
Investing activities:
Purchases of property and equipment	(391,567)		(505,085)
Proceeds from sale of equipment and patents			47,339
Payments for other assets	(71,548)		(65,592)
Net cash used for investing activities	(463,115)		(523,338)
Financing activities:
Dividends paid	(1,311,105)		(4,302,391)
Proceeds of long-term debt	2,900,000
Repayment of long-term debt	(2,900,000)
Purchase and retirement of common stock	(209,880)
Common stock issued upon exercise of options			180,708
Net cash used for financing activities	(1,520,985)		(4,121,683)
Effect of exchange rates on cash	31,163		(67,633)
Increase (Decrease) in cash and cash equivalents	2,007,409		(706,244)
Cash and cash equivalents at beginning of period	1,224,026	[1]	6,865,931
Cash and cash equivalents at end of period	$ 3,231,435		$ 6,159,687
[1]	The Balance Sheet at October 3, 2015, has been derived from the audited financial statements at that date.

Note 1 - Significant Accounting

Note 1 - Significant Accounting Policies	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Significant Accounting Policies [Text Block]	1. SIGNIFICANT ACCOUNTING POLICIES Span-America Medical Systems, Inc. (the “Company,” “we,” or “Span-America”), located in Greenville, SC, has prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended July 2, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending October 1, 2016. The unaudited Consolidated Financial Statements appearing in this Quarterly Report should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2015. Our accounting policies are consistent with those described in our Significant Accounting Policies in the Form 10-K, including but not limited to those set forth below. Our wholly-owned subsidiary, Span Medical Products Canada Inc. (“Span-Canada”), a British Columbia corporation, located in Beamsville, Ontario, Canada, is operated under the registered business name M.C. Healthcare Products (“M.C. Healthcare”). In addition, we use the name “Span-U.S.” in this report to refer to the original U.S. operations of Span-America prior to the acquisition of the assets of M.C. Healthcare Products Inc. Principles of Consolidation The consolidated financial statements include the accounts of Span-U.S. and Span-Canada, its wholly-owned subsidiary. Significant inter-entity accounts and transactions have been eliminated. Foreign Currency Translation Span-Canada uses the Canadian dollar as its functional currency. The assets and liabilities of Span-Canada are translated into U.S. dollars at the quarter-end exchange rate. Revenues and expenses are translated at weighted average exchange rates. The resulting translation adjustments are recorded as a separate component of shareholders’ equity in “Accumulated Other Comprehensive Loss.” Revenue Recognition We recognize revenue when title and risk of loss pass to the customer and collection is reasonably assured. Our sales prices are fixed at the time revenue is recognized. Recently Issued Accounting Standards In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-07, "Balance Sheet Classification of Deferred Taxes (Topic 740)." Current guidance requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position; however, the new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is currently assessing the potential impact of this new accounting pronouncement on the Company's statement of financial position. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, the standard also requires a finance lease to recognize both an interest expense and an amortization of the associated expense. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and adoption beginning on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption. Stock-Based Compensation We measure and recognize compensation expense for all stock-based payments at fair value. Stock-based payments include stock option grants. We grant options to purchase common stock to some of our employees under various plans at prices equal to the market value of the stock on the dates the options are granted. New shares of common stock are issued upon share option exercise. We do not have treasury stock. We have not made any stock option grants since fiscal year 2011.

Note 2 - Fair Value of Financia

Note 2 - Fair Value of Financial Instruments	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Fair Value Disclosures [Text Block]	2 . FAIR VALUE OF FINANCIAL INSTRUMENTS The following table summarizes information on the fair value measurement of certain Company assets as of July 2, 2016 and October 3, 2015 grouped by the categories prescribed by the FASB: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash value of life insurance policies: July 2, 2016 $ 2,649,228 - $ 2,649,228 - October 3, 2015 2,543,192 - $ 2,543,192 -

Note 3 - Inventories

Note 3 - Inventories	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Inventory Disclosure [Text Block]	3. INVENTORIES July 2, 2016 October 3, 2015 Raw materials $ 6,030,040 $ 5,455,942 Work in process 573,294 338,296 Finished goods 2,110,298 3,521,801 Reserve for obsolescence (605,000 ) (570,000 ) $ 8,108,632 $ 8,746,039

Note 4 - Property and Equipment

Note 4 - Property and Equipment	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Property, Plant and Equipment Disclosure [Text Block]	4 . PROPERTY AND EQUIPMENT July 2, 2016 October 3, 2015 Land $ 469,718 $ 469,718 Land improvements 486,698 486,698 Buildings 6,991,245 6,941,084 Machinery and equipment 9,489,664 9,241,581 Furniture and fixtures 507,251 487,856 Construction in process 97,511 85,329 Automobiles 24,075 9,520 18,066,162 17,721,786 Less accumulated depreciation (13,793,932 ) (13,185,682 ) $ 4,272,230 $ 4,536,104

Note 5 - Intangibles

Note 5 - Intangibles	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Intangible Assets Disclosure [Text Block]	5 . INTANGIBLES July 2, 2016 October 3, 2015 Patents and trademarks $ 2,241,298 $ 2,203,673 Trade names 348,998 342,416 Non-competition agreements 152,932 150,048 Customer relationships 2,565,329 2,516,952 5,308,557 5,213,089 Less accumulated amortization (3,244,419 ) (2,998,327 ) Net intangibles $ 2,064,138 $ 2,214,762 Changes in the balances shown for trade names, non-competition agreements and customer relationships result solely from foreign currency fluctuations.

Note 6 - Other Assets

Note 6 - Other Assets	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Other Assets Disclosure [Text Block]	6 . OTHER ASSETS July 2, 2016 October 3, 2015 Cash value of life insurance policies - Note 2 $ 2,649,228 $ 2,543,192 Other 96,740 410,464 $ 2,745,968 $ 2,953,656

Note 7 - Product Warranties

Note 7 - Product Warranties	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Product Warranty Disclosure [Text Block]	7 . PRODUCT WARRANTIES We offer warranties of various durations to our customers, depending on the specific product sold. The warranties require us to repair or replace non-performing products during the warranty period at no cost to the customer. At the time revenue is recognized for products covered by warranties, we record a liability for estimated costs that may be incurred under our warranties. The costs are estimated based on historical experience, including any specific warranty problems that have been identified and recovery of secondary warranty cost from component suppliers. The amounts shown below are presented net of any expected cost recovery from suppliers. Although historical warranty costs have been within our expectations, there can be no assurance that future warranty costs will not exceed historical amounts. We regularly evaluate the adequacy of the warranty liability and adjust the balance as necessary. Changes in our product warranty liability for the nine months ended July 2, 2016 and June 27, 2015 are as follows: Nine Months Ended July 2, 2016 June 27, 2015 Accrued liability at beginning of period $ 291,980 $ 257,860 Increase in reserve 186,090 197,850 Repairs and replacements (163,025 ) (164,681 ) Accrued liability at end of period $ 315,045 $ 291,029

Note 8 - Earnings Per Share of

Note 8 - Earnings Per Share of Common Stock	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Earnings Per Share [Text Block]	8 . EARNINGS PER SHARE OF COMMON STOCK The following table sets forth the computation of basic and diluted earnings per share of our common stock. Three Months Ended Nine Months Ended July 2, 2016 June 27, 2015 July 2, 2016 June 27, 2015 Numerator for basic and diluted earnings per share: Net income $ 935,219 $ 962,535 $ 2,835,720 $ 2,706,298 Denominator: Denominator for basic earnings per share: Weighted average shares 2,734,468 2,991,192 2,729,743 2,976,994 Effect of dilutive securities: Employee stock options 24,035 26,344 25,418 29,436 Denominator for diluted earnings per share: Adjusted weighted average shares and assumed conversions 2,758,503 3,017,536 2,755,161 3,006,430 Net income per share of common stock: Basic $ 0.34 $ 0.32 $ 1.04 $ 0.91 Diluted $ 0.34 $ 0.32 $ 1.03 $ 0.90

Note 9 - Operations and Industr

Note 9 - Operations and Industry Segments	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Segment Reporting Disclosure [Text Block]	9 . OPERATIONS AND INDUSTRY SEGMENTS For management and reporting purposes, we divide our business into two segments: Medical and Custom Products. This industry segment information corresponds to the markets in the United States and Canada for which we manufacture and distribute our various products. The following table summarizes certain information on industry segments: Three Months Ended Nine Months Ended July 2, 2016 June 27, 2015 July 2, 2016 June 27, 2015 Net sales: Medical $ 11,529,818 $ 11,663,716 $ 33,894,632 $ 35,602,295 Custom products 3,817,559 4,149,758 17,757,556 10,965,471 $ 15,347,377 $ 15,813,474 $ 51,652,188 $ 46,567,766 Operating profit (loss): Medical $ 1,404,014 $ 1,404,066 $ 4,135,116 $ 4,404,386 Custom products 284,745 89,762 643,965 (255,893 ) 1,688,759 1,493,828 4,779,081 4,148,493 Corporate expense (202,579 ) (175,626 ) (576,256 ) (561,430 ) Other income (expense) (66,961 ) 64,333 (12,105 ) 302,235 Income before income taxes $ 1,419,219 $ 1,382,535 $ 4,190,720 $ 3,889,298 Total sales by industry segment include sales to unaffiliated customers as reported in our consolidated statements of comprehensive income. In calculating operating profit, non-allocable general corporate expenses, interest expense, other income and income taxes are not included, but certain corporate operating expenses incurred for the benefit of both segments are included on an allocated basis.

Note 10 - Commitments and Conti

Note 10 - Commitments and Contingencies	9 Months Ended
	Jul. 02, 2016
Notes to Financial Statements
Commitments and Contingencies Disclosure [Text Block]	1 0 . COMMITMENTS AND CONTINGENCIES From time to time we are defendants in legal actions involving claims arising in the normal course of business. We believe that, as a result of legal defenses and insurance arrangements with parties we believe to be financially capable, none of these actions, if determined adversely, should have a material adverse effect on our operations or financial condition.

Significant Accounting Policies

Significant Accounting Policies (Policies)	9 Months Ended
	Jul. 02, 2016
Accounting Policies [Abstract]
Consolidation, Policy [Policy Text Block]	Principles of Consolidation The consolidated financial statements include the accounts of Span-U.S. and Span-Canada, its wholly-owned subsidiary. Significant inter-entity accounts and transactions have been eliminated.
Foreign Currency Transactions and Translations Policy [Policy Text Block]	Foreign Currency Translation Span-Canada uses the Canadian dollar as its functional currency. The assets and liabilities of Span-Canada are translated into U.S. dollars at the quarter-end exchange rate. Revenues and expenses are translated at weighted average exchange rates. The resulting translation adjustments are recorded as a separate component of shareholders’ equity in “Accumulated Other Comprehensive Loss.”
Revenue Recognition, Policy [Policy Text Block]	Revenue Recognition We recognize revenue when title and risk of loss pass to the customer and collection is reasonably assured. Our sales prices are fixed at the time revenue is recognized.
New Accounting Pronouncements, Policy [Policy Text Block]	Recently Issued Accounting Standards In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-07, "Balance Sheet Classification of Deferred Taxes (Topic 740)." Current guidance requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position; however, the new guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is currently assessing the potential impact of this new accounting pronouncement on the Company's statement of financial position. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, the standard also requires a finance lease to recognize both an interest expense and an amortization of the associated expense. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and adoption beginning on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]	Stock-Based Compensation We measure and recognize compensation expense for all stock-based payments at fair value. Stock-based payments include stock option grants. We grant options to purchase common stock to some of our employees under various plans at prices equal to the market value of the stock on the dates the options are granted. New shares of common stock are issued upon share option exercise. We do not have treasury stock. We have not made any stock option grants since fiscal year 2011.

Note 2 - Fair Value of Financ17

Note 2 - Fair Value of Financial Instruments (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]	Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash value of life insurance policies: July 2, 2016 $ 2,649,228 - $ 2,649,228 - October 3, 2015 2,543,192 - $ 2,543,192 -

Note 3 - Inventories (Tables)

Note 3 - Inventories (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Schedule of Inventory, Current [Table Text Block]	July 2, 2016 October 3, 2015 Raw materials $ 6,030,040 $ 5,455,942 Work in process 573,294 338,296 Finished goods 2,110,298 3,521,801 Reserve for obsolescence (605,000 ) (570,000 ) $ 8,108,632 $ 8,746,039

Note 4 - Property and Equipme19

Note 4 - Property and Equipment (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Property, Plant and Equipment [Table Text Block]	July 2, 2016 October 3, 2015 Land $ 469,718 $ 469,718 Land improvements 486,698 486,698 Buildings 6,991,245 6,941,084 Machinery and equipment 9,489,664 9,241,581 Furniture and fixtures 507,251 487,856 Construction in process 97,511 85,329 Automobiles 24,075 9,520 18,066,162 17,721,786 Less accumulated depreciation (13,793,932 ) (13,185,682 ) $ 4,272,230 $ 4,536,104

Note 5 - Intangibles (Tables)

Note 5 - Intangibles (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Schedule of Finite-Lived Intangible Assets [Table Text Block]	July 2, 2016 October 3, 2015 Patents and trademarks $ 2,241,298 $ 2,203,673 Trade names 348,998 342,416 Non-competition agreements 152,932 150,048 Customer relationships 2,565,329 2,516,952 5,308,557 5,213,089 Less accumulated amortization (3,244,419 ) (2,998,327 ) Net intangibles $ 2,064,138 $ 2,214,762

Note 6 - Other Assets (Tables)

Note 6 - Other Assets (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Schedule of Other Assets, Noncurrent [Table Text Block]	July 2, 2016 October 3, 2015 Cash value of life insurance policies - Note 2 $ 2,649,228 $ 2,543,192 Other 96,740 410,464 $ 2,745,968 $ 2,953,656

Note 7 - Product Warranties (Ta

Note 7 - Product Warranties (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Schedule of Product Warranty Liability [Table Text Block]	Nine Months Ended July 2, 2016 June 27, 2015 Accrued liability at beginning of period $ 291,980 $ 257,860 Increase in reserve 186,090 197,850 Repairs and replacements (163,025 ) (164,681 ) Accrued liability at end of period $ 315,045 $ 291,029

Note 8 - Earnings Per Share o23

Note 8 - Earnings Per Share of Common Stock (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Three Months Ended Nine Months Ended July 2, 2016 June 27, 2015 July 2, 2016 June 27, 2015 Numerator for basic and diluted earnings per share: Net income $ 935,219 $ 962,535 $ 2,835,720 $ 2,706,298 Denominator: Denominator for basic earnings per share: Weighted average shares 2,734,468 2,991,192 2,729,743 2,976,994 Effect of dilutive securities: Employee stock options 24,035 26,344 25,418 29,436 Denominator for diluted earnings per share: Adjusted weighted average shares and assumed conversions 2,758,503 3,017,536 2,755,161 3,006,430 Net income per share of common stock: Basic $ 0.34 $ 0.32 $ 1.04 $ 0.91 Diluted $ 0.34 $ 0.32 $ 1.03 $ 0.90

Note 9 - Operations and Indus24

Note 9 - Operations and Industry Segments (Tables)	9 Months Ended
	Jul. 02, 2016
Notes Tables
Schedule of Segment Reporting Information, by Segment [Table Text Block]	Three Months Ended Nine Months Ended July 2, 2016 June 27, 2015 July 2, 2016 June 27, 2015 Net sales: Medical $ 11,529,818 $ 11,663,716 $ 33,894,632 $ 35,602,295 Custom products 3,817,559 4,149,758 17,757,556 10,965,471 $ 15,347,377 $ 15,813,474 $ 51,652,188 $ 46,567,766 Operating profit (loss): Medical $ 1,404,014 $ 1,404,066 $ 4,135,116 $ 4,404,386 Custom products 284,745 89,762 643,965 (255,893 ) 1,688,759 1,493,828 4,779,081 4,148,493 Corporate expense (202,579 ) (175,626 ) (576,256 ) (561,430 ) Other income (expense) (66,961 ) 64,333 (12,105 ) 302,235 Income before income taxes $ 1,419,219 $ 1,382,535 $ 4,190,720 $ 3,889,298

Note 2 - Fair Value Measurement

Note 2 - Fair Value Measurement of Assets (Details) - USD ($)	Jul. 02, 2016	Oct. 03, 2015
Fair Value, Inputs, Level 2 [Member]
Cash value of life insurance policies	$ 2,649,228	$ 2,543,192
Cash value of life insurance policies	$ 2,649,228	$ 2,543,192

Note 3 - Components of Inventor

Note 3 - Components of Inventories (Details) - USD ($)	Jul. 02, 2016	Oct. 03, 2015
Raw materials	$ 6,030,040	$ 5,455,942
Work in process	573,294	338,296
Finished goods	2,110,298	3,521,801
Reserve for obsolescence	(605,000)	(570,000)
	$ 8,108,632	$ 8,746,039	[1]
[1]	The Balance Sheet at October 3, 2015, has been derived from the audited financial statements at that date.

Note 4 - Property and Equipme27

Note 4 - Property and Equipment (Details) - USD ($)	Jul. 02, 2016	Oct. 03, 2015
Land	$ 469,718	$ 469,718
Land improvements	486,698	486,698
Buildings	6,991,245	6,941,084
Machinery and equipment	9,489,664	9,241,581
Furniture and fixtures	507,251	487,856
Construction in process	97,511	85,329
Automobiles	24,075	9,520
	18,066,162	17,721,786
Less accumulated depreciation	(13,793,932)	(13,185,682)
	$ 4,272,230	$ 4,536,104

Note 5 - Intangibles (Details)

Note 5 - Intangibles (Details) - USD ($)	Jul. 02, 2016	Oct. 03, 2015
Patents and trademarks	$ 2,241,298	$ 2,203,673
Trade names	348,998	342,416
Non-competition agreements	152,932	150,048
Customer relationships	2,565,329	2,516,952
	5,308,557	5,213,089
Less accumulated amortization	(3,244,419)	(2,998,327)
Net intangibles	$ 2,064,138	$ 2,214,762

Note 6 - Other Assets (Details)

Note 6 - Other Assets (Details) - USD ($)	Jul. 02, 2016	Oct. 03, 2015
Cash value of life insurance policies - Note 2	$ 2,649,228	$ 2,543,192
Other	96,740	410,464
	$ 2,745,968	$ 2,953,656	[1]
[1]	The Balance Sheet at October 3, 2015, has been derived from the audited financial statements at that date.

Note 7 - Changes in Product War

Note 7 - Changes in Product Warranty Liability (Details) - USD ($)	9 Months Ended
	Jul. 02, 2016	Jun. 27, 2015
Accrued liability at beginning of period	$ 291,980	$ 257,860
Increase in reserve	186,090	197,850
Repairs and replacements	(163,025)	(164,681)
Accrued liability at end of period	$ 315,045	$ 291,029

Note 8 - Basic and Diluted Earn

Note 8 - Basic and Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jul. 02, 2016	Jun. 27, 2015	Jul. 02, 2016	Jun. 27, 2015
Numerator for basic and diluted earnings per share:
Net income	$ 935,219	$ 962,535	$ 2,835,720	$ 2,706,298
Denominator for basic earnings per share:
Weighted average shares (in shares)	2,734,468	2,991,192	2,729,743	2,976,994
Effect of dilutive securities:
Employee stock options (in shares)	24,035	26,344	25,418	29,436
Weighted average shares outstanding:
Adjusted weighted average shares and assumed conversions (in shares)	2,758,503	3,017,536	2,755,161	3,006,430
Net income per share of common stock:
Basic (in dollars per share)	$ 0.34	$ 0.32	$ 1.04	$ 0.91
Diluted (in dollars per share)	$ 0.34	$ 0.32	$ 1.03	$ 0.90

Note 9 - Operations and Indus32

Note 9 - Operations and Industry Segments (Details Textual)	9 Months Ended
	Jul. 02, 2016
Number of Reportable Segments	2

Note 9 - Information on Industr

Note 9 - Information on Industry Segments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jul. 02, 2016	Jun. 27, 2015	Jul. 02, 2016	Jun. 27, 2015
Medical [Member] | Operating Segments [Member]
Net sales	$ 11,529,818	$ 11,663,716	$ 33,894,632	$ 35,602,295
Operating profit	1,404,014	1,404,066	4,135,116	4,404,386
Custom Products [Member] | Operating Segments [Member]
Net sales	3,817,559	4,149,758	17,757,556	10,965,471
Operating profit	284,745	89,762	643,965	(255,893)
Operating Segments [Member]
Net sales	15,347,377	15,813,474	51,652,188	46,567,766
Operating profit	1,688,759	1,493,828	4,779,081	4,148,493
Corporate, Non-Segment [Member]
Corporate expense	(202,579)	(175,626)	(576,256)	(561,430)
Operating profit	1,486,180	1,318,202	4,202,825	3,587,063
Corporate expense	4,167,615	4,122,369	12,125,107	12,284,357
Other income (expense)	(66,961)	64,333	(12,105)	302,235
Income before income taxes	$ 1,419,219	$ 1,382,535	$ 4,190,720	$ 3,889,298